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-------------------------------------------------------------- This story was printed from ZDNet Australia. --------------------------------------------------------------
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Dot coms: not dead just yet By Rachel Lebihan, ZDNet Australia News November 20, 2000 URL: http://www.zdnet.com.au/news/business/soa/Dot-coms-not-dead-just-yet/0,139023166,120107090,00.htm
Dot coms may not be dead just yet but one management consultancy says they may as well throw in the towel now if they don't find an alternative way to sustain business. "The ball game's over for pure players in the dot com arena," director at McKinsey & Company, George Riedel, told ZDNet. "They're all going to try and find a path to some sustainable business whether that be through merger and consolidation, partnering with a larger incumbent or focusing on offline revenue," Riedel said. "But it'll be awfully hard." McKinsey & Company this week tied up the results of a survey of 51 e-tailers and content providers across nine markets in the Asia-Pacific region and found them to be floundering more excessively than their struggling US counterparts. In Asia e-tailers and content providers attract 23,000 visitors a month compared to 685,000 in the US. However, whilst attracting visitors isn't so much a problem, converting them to spenders is. Furthermore, the amount of money spent to generate custom compared to the actual revenue created by online spenders doesn't add up, according to Riedel. Only 0.8 percent of visitors to the Asian dot com market were revenue paying customers, compared to 2.3 percent in the US, Riedel said. Dot coms would "have to break the laws of physics to get [investment] back," Riedel said. Although a large number of Asian-based dot coms are performing much worse than those struggling in the US, the repeat customer rate in Asia was roughly comparable to the US with 28 percent of Asian purchasers returning to the site and a return rate of 30 percent in the US. However, whilst US dot coms face the same burn out problem as those in Asia, "it's a bigger market so there may be a chance to have a few survive," Riedel said. So what does the future hold for dot coms? "I don't see how these guys are going to work," Riedel said. "If you're in the last round of funding you're going to be disappointed."
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